Insider Trading and Front Running as the Basis of Money Laundering

Abstract

This chapter explores the fine line between insider trading and front running, providing a categorical analysis of these financial crimes. It highlights how insider trading serves as a predicate offense for money laundering on a global scale and focuses on Pakistan as a vulnerable market for such malpractices. The chapter examines three cases investigated by the apex regulator: one involving a politically exposed person engaged in illicit activities, another exposing a corporate executive's involvement in insider trading and front running, and a third case revealing front running by mid-level managers at a brokerage house. These cases offer detailed insights into the execution of these crimes and underscore the crucial role of regulators and investigators. Additionally, the chapter emphasizes the significant impact of these activities on the financial economy, particularly in connection with FATF measures.